Gaza City - Israeli Prime Minister Benjamin Netanyahu has blocked millions in Qatari aid to the Gaza Strip in response to renewed border hostilities, risking increased tensions with the Palestinian territory's Islamist rulers Hamas during Israel's election campaign.
Weeks of relative calm in the Gaza Strip ended Tuesday when Israeli soldiers were fired on along the border with the enclave in two separate incidents.
One soldier was lightly injured when a bullet hit his helmet.
In response Israeli tanks struck two Hamas positions in Gaza, killing one militant, while overnight Israeli fighter jets struck what the army said was a Hamas military camp in northern Gaza.
Israel and Hamas have fought three wars since 2008 and fears of a fourth round remain.
However, violence has abated since November as a result of an informal truce between the parties.
Under that agreement Israel has permitted Gulf state Qatar, a rare Hamas ally, to bring in aid to the strip, including $15 million a month to pay salaries of Hamas civil servants and provide aid to impoverished residents.
The January payment had been expected to enter Gaza on Wednesday or Thursday but Netanyahu has decided to block it after the border flare-up, an Israeli official confirmed.
This is the first time that Israel has admitted to obstructing the transfer, which was already delayed by two weeks.
The payment would be the third of six planned tranches, totalling $90 million, in connection with the truce.
Israel's permission is required since the cash must be delivered via its territory.
Hamas is labelled a terrorist organisation by the United States and the European Union, and banks are hesitant to make the transfer.
So far Hamas has stuck to indirect warnings against Israel but said Wednesday it held Israel fully responsible for any escalation.
At the funeral of the Hamas fighter Wednesday, mourners called for revenge as the body was accompanied by members of Hamas's military wing.
Israel maintains a crippling blockade of the Gaza Strip, the cramped territory wedged between Israel, Egypt and the Mediterranean.
The Jewish state says it is necessary to isolate Hamas but critics say it amounts to collective punishment of the enclave's two million residents.
The Qatari payments are controversial in Israel, where they have sparked opposition from right-wing activists and politicians.
In November, Israeli Defence Minister Avigdor Lieberman resigned after accusing Netanyahu of being soft on Hamas following a flare-up.
The rightwing premier is now fighting a campaign ahead of April 9 elections, having long portrayed himself as "Mr Security" to Israelis.
Widely shared images of suitcases of cash being sent into Gaza through Israel could prove awkward for Netanyahu, running for a fifth term despite corruption allegations.
The father of Hadar Goldin - an Israeli soldier killed in the 2014 Gaza war and whose body Hamas is still believed to hold - told army radio Tuesday he believes the funds are ultimately going to Hamas.
"That's what happens when you capitulate to terrorism," Simha Goldin said.
The Gaza Strip came close to a new conflict a number of times in 2018, with Hamas-backed demonstrations along the border throughout the year.
The weekly protests have been calling for Palestinian refugees in Gaza to be able to return to their former lands now inside Israel.
Israel accuses Hamas of using the protests as cover to carry out violence.
At least 244 Palestinians have been killed by Israeli fire since March, mostly during border clashes but also by tank fire and airstrikes.
Two Israeli soldiers have been killed.
Hamas said in a statement it "never accepts shedding the blood of the Palestinian people to fuel the Israeli elections advertising."
United Nations envoy Nickolay Mladenov warned Tuesday that the living conditions in Gaza remained desperate and the risk of new conflict was high.
"There is no status quo; there is only a deterioration that, if left unchecked, without a vision and the political will for peace, can only lead to endless conflict and the steady rise of radicalisation on all sides," he told the UN Security Council.